Wed, May 15, 2019 - Page 10 News List

Singapore unveils new rules on old homes

Bloomberg

Pedestrians walk along a sidewalk at a Housing Development Board public housing estate in Singapore’s Toa Payoh District on April 5.

Photo: Bloomberg

Singapore’s aging public housing has been a source of anxiety, for home owners and the government alike.

It has become particularly acute in the lead-up to national elections considering more than 40 percent of the population’s wealth is tied up in real estate.

However, there might be some relief, with the government announcing new rules for those willing to buy older properties.

According to analysts, the changes should halt falling resale values and support dwindling buyer demand.

From last week, would-be home buyers can unlock more of their retirement savings to pay for a property, so long as the remaining lease of that property is at least 20 years and covers the youngest buyer until they are 95 years old.

Under previous rules, pension fund usage restrictions were linked to the amount of time left on the lease rather than a buyer’s age.

In Singapore, about 80 percent of people live in Housing Development Board (HDB) apartments, which all come with a 99-year lease.

With many leases approaching the 40-year mark, the resale value of apartments has been dropping because there is not clarity over what would happen at the end of the term.

HDB unit resale prices fell 0.3 percent in the three months ended March, their third straight quarterly decline.

HDB apartments with less than 60 years of residual lease made up 14 percent of resale transactions in the first quarter — the highest percentage of older apartments sold on record.

“By raising the age to 95, the pool of buyers who can utilize pension funds to buy older flats will increase,” OrangeTee & Tie Pte head of research Christine Sun said. “The increased demand may stabilize the price gap between older and newer flats.”

The move is politically prudent at a time when the ruling People’s Action Party party led by Singaporean Prime Minister Lee Hsien Loong (李顯龍) is headed for elections.

Meanwhile, supporting the value of older homes might boost demand for private homes — which in Singapore are typically condominiums complete with pool, gym and other facilities — as well.

That is because owners of older apartments might be able to sell them faster and then upgrade.

“The amended rules could potentially increase the pool of buyers and inject more liquidity into the resale market for older flats and private leasehold homes,” ZACD Group Ltd executive director Nicholas Mak said. “This could help owners of older flats who previously found it challenging to sell.”

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